Fiduciary Duty Claims Against Hedge Fund Managers and How to Avoid Them

New York (HedgeCo.Net) – On Wednesday, Zachary Newman and Jonathan Proman, from Hahn & Hessen’s Litigation Department released a white paper which provides an overview of what every hedge fund manager should know about Fiduciary Duty case history.

Using recent cases involving hedge funds the whitepaper focuses on both background of fiduciary duty and goes into details regarding the obligations which have been distilled by contemporary case law that make up “Fiduciary duty”.

“Hedge Fund Managers tend to start hedge funds so that they can work outside of the regulatory regimes that oversee traditional registered investment advisors & mutual funds, ” said Evan Rapoport, Founder and CEO of HedgeCo Networks “However, it’s imperative that hedge fund managers familiarize themselves with the fiduciary obligations set forth by the SEC and implement those in their practice. While fund managers may be exempt from registration requirements, they are not exempt from all statutes governing investment advisors, and in this case, we are talking specifically about fiduciary duty.”

Knowing what fiduciary duty consists of can help managers insulate themselves from liability. Volatile capital markets often mean an asset manager’s returns will not outperform the benchmark. Even when underperforming, managers may help to mitigate the risk of breach of fiduciary duty lawsuits by apprising themselves of the necessary standards of conduct, and acting accordingly.

Zachary G. Newman, a Partner, and Jonathan M. Proman, an Associate, are members of Hahn & Hessen’s Litigation Department. Founded in 1931, the New York located firm represents leading market participants in all aspects of banking, corporate finance, securities transactions, commercial litigation and alternative dispute resolution, acquisitions, investments, and real estate transactions.